This was always penciled in as the big week for this quarterly earnings season — earnings from so many of the mega-cap technology stocks that are the most widely-held companies in the world and have been the biggest drivers of stock market performance in recent years, plus another Fed announcement on interest rates. Whatever would happen?

With the Fed, it was exactly the announcement that everyone expected, a quarter-point interest rate increase, but the words that Fed Chair Jerome Powell used in his comments were heard as “dovish” because he talked a lot about the rising confidence that we are firmly in a disinflation trend (which means that we still have inflation, even high inflation, but the rate of inflation is getting steadily lower). In effect, he failed to talk quite as tough as he and other Federal Reserve spokespeople sometimes have in the past few months, so traders flashed the green light for “full bullishness ahead” thanks to the likelihood that this means the Fed rate hikes will end soon… and, they hope, unemployment will get bad enough that we’ll even see rate cuts by the end of 2023 (Powell continued to indicate that he sees no chance of rate cuts in the foreseeable future… the market seems to think he’s bluffing).

It seems like the market isn’t quite as obsessed with rising rates anymore, now that things have clearly stabilized to some degree on the inflation front and are probably getting better… now it’s about sentiment and what happens next and about whether the Fed will loosen up enough this year to let the animal spirits ride wild again. You can just see the investment bankers with three more years of boat payments crossing their fingers behind their backs, whispering “Please, Jerome, just one more bubble!”

What will happen to the stock and bond markets? Well, we can fret about it… but we can’t know. We’re in a push-pull between “back to the bull market!” and “it’s a bear market rally!” right now, and, for the most part, we’ll just have to ride through it and wait to see how it plays out. It’s entirely possible that we’re in the “false recovery” stage of the popping of a bubble, as many grumpy people believe, and it’s also entirely possible that we’re going to have stable interest rates now, the economy will settle, and the ...